Mutual Fund Factsheet: What It Includes and How to Read It

Do you know where your mutual fund is investing your money, or which stocks and sectors have been added or removed since you invested? Are you aware of who your fund manager is and how they've performed in the past? These are all key questions, and the mutual fund factsheet holds the answers, being aware of which makes investing in mutual funds easier for you.

A mutual fund factsheet is an informative report carrying all the pertinent facts regarding the performance of a mutual fund, including its composition in terms of the portfolio and other details. The factsheet acts as a complete guide for investors to take decisions regarding their investment strategies. Fund houses issue them every month, as per the order from Securities and Exchange Board of India (SEBI) that says that this factsheet must be published to provide transparency.

• Mutual fund factsheets are a very crucial tool to evaluate the performance of funds and what investment policy was adopted by the fund managers.
• It gives details of the nature of objectives, manager information, portfolio structure, performance, and key risk-return ratios.
• From a proper analysis of the fact sheet you can make a smart investment choice.

Let us break down some of the key sections of a mutual fund factsheet, so you understand how you can use this information to assess your investment in mutual fund schemes.

1. Basic fund information

The page carries the basic information like the scheme's aim, category, NAV, plan (whether it is Growth, Dividend, Direct), AUM, benchmark, minimum amount to invest for both lump sum and SIP investment, and the exit load. The risk-o-meter will indicate the intensity of risk for the scheme, low to high. The product label outlines how the investment is suitable for various types of investors with different risk appetites.

2. Manager details

This section will give you information about the fund manager’s experience, qualifications, as well as the other funds they have been managing. A stable fund manager with experience is always a confident choice.

3. Portfolio - composition and characteristics

Another crucial analysis tool is the portfolio composition section, as it depicts exactly where your money is going in. Here is what that normally would include:

• Asset allocation: It is essentially a breakdown of what percent of your money the fund invests in stocks, bonds, cash, and other assets.
• Top Holdings: This is a list showing the top stocks or assets of the fund along with their percentage weightage.
• Sector allocation: It shows which sectors your fund is investing in such as banking, IT, or pharmaceuticals.

This lets you know how diversified your investment is as well as how much exposure to risk it has.

4. Performance analysis

A mutual fund factsheet gives historical performance details over various periods of time: inception, 10 years, 5 years, 3 years and 1 year. It generally compares:

• Scheme returns: How the fund fared over time.
• SIP returns: What one would have gotten if an investment had been made through a Systematic Investment Plan.
• Benchmark comparison : How the fund did against the benchmark index.

This section is important to conclude if the fund has been consistently producing good returns.

5. Important ratios and what they signify

A mutual fund factsheet contains several risk return measures that can be used to calculate and measure the performance of a fund. These may include:

Reading a mutual fund factsheet can seem difficult at first but is a very useful tool that provides you with a lot of information. Being aware of all the information on a mutual fund factsheet will help you make smart and informed investments, and your portfolio will continue to be in line with meeting your long-term goals.

The Bajaj Finserv Mutual Fund Platform has more than 1,000 mutual funds that you can choose from. The platform’s user-friendly interface and efficient tools such as a mutual fund calculator makes it easier for you to compare mutual funds and choose the best suited options.